Oil near flat; virus impact offsets Libya supply disruptions
Oil prices were near flat on Tuesday, pressured by concerns over the impact on crude demand from the coronavirus outbreak in China, but prices drew support from a reduction in supply from Libya.
Brent crude LCOc1 rose 8 cents to settle at $57.75 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures were unchanged from the previous session, settling at $52.05 a barrel.
Though new cases of the coronavirus in mainland China have dipped, global experts said it was too early to judge if the outbreak is being contained. Forecasters including the International Energy Agency (IEA) have cut 2020 oil demand estimates because of the virus.
The virus is having a wider impact on financial markets. Asian shares fell and Wall Street also retreated after Apple Inc (AAPL.O) said it would miss quarterly revenue guidance due to slower iPhone production and weakened demand in China.
The IEA last week said first-quarter oil demand was likely to fall by 435,000 barrels per day (bpd) from a year ago.
The Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia have been considering further production cuts to support prices.
The group, known as OPEC+, has a pact to cut oil output by 1.7 million bpd until the end of March.
OPEC+ oil ministers will meet in Vienna on March 6 as initially planned, a senior Russian energy ministry official said on Tuesday. The group will consider an advisory panel’s recommendation to cut supply by a further 600,000 bpd.
OPEC has been trying to persuade Russia on the deeper cuts. Moscow has said it will disclose its stance in the coming days.
“Risk aversion has returned to the markets,” said Commerzbank analyst Carsten Fritsch. “OPEC+ has shown no sign yet of reacting to the virus-related slump in demand by making additional production cuts.”
Supporting prices, oil output in Libya has collapsed since Jan. 18 because of a blockade of ports and oilfields.
“Supportive fundamental influences are still being seen in a continued loss of… Libyan supply availability,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Elsewhere, Saudi Arabia’s crude stockpiles fell by 11.8 million barrels in December, despite steady shipments by the world’s biggest oil exporter, official data showed.
Meanwhile, U.S. shale oil output is expected to rise by about 18,000 barrels per day (bpd) in March to a record 9.18 million bpd, driven by gains in the Permian Basin, data from the U.S. Energy Information Administration showed Tuesday.